Ofgem orders E.ON to pay £12m to vulnerable customers

Energy supplier E.ON is to pay £12 million to vulnerable customers as part of a redress package after an Ofgem investigation found the company broke energy sales rules between June 2010 and December 2013

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My research today shows that the scandal within a scandal here is that the regulator could not order Eon to pay a penny back to customers. The law would not allow it. The only way the £12 million "penalty" was reached was through agreement with E.ON itself.

The law has only just been changed to allow Ofgem to force energy firms to payback - and they are not allowed to use it in cases (like this) where the misdeeds go back years.

Ofgem has defended its decision to order energy firm E.ON to pay £12 million to customers, despite the company making an £8 billion turnover.

Sarah Harrison, the regulator's senior partner in charge of enforcement told ITV News that compensation was not the only issue at hand, but making the energy market "simpler, clearer and fairer for customers" was also an important factor.

Investigations in 2011 showed that energy suppliers were not giving customers the best deal, a consumer watchdog has said, after E.ON was ordered to pay £12 million to vulnerable customers. Which? executive director said it was "extraordinary" it had continued for so long:

While this fine sends a clear warning message that mis-selling won't be tolerated, it's too late for customers who were mis-sold and the damage to consumer confidence in the energy industry has already been done.

Energy suppliers should not wait for the outcome of the proposed competition review and must seize their last chance to sort out woeful service standards and put customers first. ?Hard-pressed consumers ?need to be confident that the price they pay is fair.

Britain's energy market is broken, the shadow energy and climate change minister has said, after regulator Ofgem found that energy supplier E.ON has mis-sold to customers. Jonathan Reynolds said in a statement:

E.ON is just the latest in a long line of energy companies to be found guilty of misleading the public. The energy giants must know that if they mistreat customers already facing a cost-of-living crisis there will be a very heavy price to pay.

Our plans will break up the big energy companies, put an end to their secret deals and make tariffs simpler and fairer.

Tony Cocker, CEO of E.ON during a Select Committee hearing in October 2013. Credit: PA

Tony Cocker said as part of overhauling its sales operations the company has ended face-to-face sales and outbound residential cold calling.

He added: "It is completely unacceptable that we may have been unclear with customers about their tariff choices and as a result those customers may not have made the best choices for them [...] There was no organised attempt to mislead, and Ofgem has acknowledged this".

E.ON has agreed to pay £12 million to vulnerable customers after an Ofgem investigation found that the energy supplier had failed to properly train its staff in providing correct information to customers, which could have misled customers. As part of this package E.ON said they will:

Pay around £35 to 333,000 of their customers who are normally recipients of the Warm Home Discount. This redress package is thought to benefit pensioners, disabled and low income families.

Additionally, E.ON has agreed to make automatic payments to some vulnerable customers who may have been affected by E.ON’s poor sales practices.

The supplier will write to around 465,000 customers it has identified through its redress work, informing them of how to get in touch to find out whether they were mis-sold to.

Ofgem has praised E.ON for "accepting responsibility for its actions" after the energy watchdog found the supplier had mis-sold to customers. Ofgem's senior partner in charge of enforcement said:

Since 2010 Ofgem has imposed nearly £100m in fines and redress on energy companies for various rule breaches, including £39m for misselling, and introduced radical new reforms to make the market simpler, clearer and fairer for consumers.

The time is right to draw a line under past supplier bad behaviour and truly rebuild trust so consumers are put at the heart of the energy market.